Canada: Class Actions For Spam And Canada's Anti-Spam Legislation's Private Right Of Action?

Last Updated: March 28 2017
Article by Lucas E. Lung

Also authored by: Eric Dumschat, Student-at-Law

Canada's anti-spam legislation ("CASL") generally prohibits the transmission of commercial electronic messages ("CEMs") without a recipient's express or implied consent. CASL came into effect on July 1, 2014 to much fanfare and, ironically, was preceded by a flurry of emails requesting permission to communicate electronically. To date, there have been very few prosecutions and, to the knowledge of these writers, no judicial consideration of CASL's provisions. However, that may change after July 1, 2017.

On July 1, 2017, the private right of action in section 47 of CASL comes into force. Affected private persons will then be able to seek an order against those they allege:

  1. have contravened the anti-spam and anti-malware provisions of sections 6 to 9 of CASL;
  2. have contravened the collection, use or disclosure of personal information under section 5 of the Personal Information Protection and Electronic Documents Act relating to collection or use under subsections 7.1(2) and (3) of that act; and
  3. have engaged in reviewable conduct under section 74.011 of the Competition Act regarding false and misleading representations in CEMs.

The court, if satisfied that a contravention has occurred or that there has been engagement in reviewable conduct as set out above, may then order payment under section 51 of CASL. Compensation may equal to the actual loss or damage suffered or expenses incurred by the applicant, and depending on the nature of the contravention, a maximum of $200 for each contravention/occurrence, and, in any event, an amount not to exceed $1,000,000 per day. Importantly in these latter provisions, and similar to the breach of privacy law under the tort of intrusion upon seclusion, there is no need to prove damages in order to attract an award. Given that individual compensation orders are expected to be relatively modest and that there is a fixed amount payable without proof of damage for certain contraventions/occurrences, the private cause of action in CASL appears particularly well-suited to class actions. Since the enactment of this legislation there have been concerns about class actions being instituted under this provision.

At first glance, there are various issues that will need to be clarified in these new provisions. For instance, the retroactivity of the private right of action is uncertain. The legislation provides for a limitation period of three years from the date the applicant became aware. Defence lawyers may argue that there is a strong presumption in the law against the retroactive or retrospective application of statutes. Plaintiffs' lawyers may argue, among other things, that there is nothing in the language of section 47 that indicates it applies only to contraventions that occur on or after July 1, 2017, in fact the limitation period suggests that it is when the applicant becomes aware that is most important. Plaintiffs' lawyers may also argue that the usual concerns about retroactivity are alleviated by the fact that defendants were already at risk of regulatory prosecution prior to July 1, 2017. The only certainty is that this will likely be a hard-fought issue that will ultimately need to be determined by the Court.

In addition, subsection 47(3) requires that the application be accompanied by an affidavit "that identifies the alleged contravention or reviewable conduct, sets out every provision, act or omission at issue and any other facts in support of the application, ...." It remains to be seen whether this provision will be interpreted as requiring applicants to identify each and every contravention alleged. If so, query whether such a requirement may make it difficult to satisfy the commonality requirement of a proposed class proceeding or whether this can be bifurcated to be addressed at an individual issues stage.

Finally, section 48 may give rise to strategic considerations for certain potential defendants. In general terms, section 48 seeks to ensure that a person will not be the subject of a regulatory prosecution and a defendant in an application commenced under section 47. Specifically, a court may not consider an application if the person has already entered into an undertaking under subsection 21(1) (which is a way of settling a regulatory investigation or prosecution) or has been served with a notice of violation under subsection 22(1)(which is the way of commencing a prosecution). Also, if a court has determined that it may consider an application against a person under section 47, unless the application is discontinued, the person may not enter into an undertaking or be served with a notice of violation. It will be interesting to see whether those who become aware of a contravention of CASL will attempt to get ahead of a potential class action by approaching the relevant regulator and offering to enter into undertakings in relation to the particular contravention.

It remains anticipated that there will be class actions commenced under this private right of action; however, whether there will be as many as originally feared is unknown. What is known is that defendants remain best served to ensure that they are compliant with CASL and that plaintiffs will be best served by carefully selecting the first class actions. When the class actions come, both defendants and plaintiffs will have to address at least some of the above, and likely other, concerns.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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